India’s real estate market booms on NRI demand, Gulf expats lead investment surge

A runaway increase in home prices in the Indian market in the recent months and years, combined with absence of any major price discounts or other freebies by developers this festive season, further underscore the importance of the current surge in NRI demand.

Average residential property prices across the top 7 Indian cities are estimated to have increased in the range of 14-31 percent in the last five years, with 2023 seeing the maximum price jump.

“The festive quarter [October-December] has certainly begun on a positive note with both new launches and housing sales on full swing across the top 7 cities,” Morgan Owen, MD – MENA at Anarock Group, a leading real estate consultancy operating in India and the GCC, told Arabian Business.

“Going by the current trends [in NRI purchases] in the housing market, this year we may expect at least 25-30 percent yearly growth in housing sales in Q4 2023,” he said.

Owen also confirmed that the Gulf region continues to be the largest expat group investing in real estate in India.

Senior executives at some of the leading developers and consultancies also confirmed the surge in NRI demand in the residential property segment this festive season, considered the peak season for the real estate sector in India.

Industry data also reveals that expat Indian demand for acquiring housing assets in India have registered at least 20 percent spike in the first nine months this year, compared to the corresponding period in 2022.

NRIs increasingly prefer luxury and super luxury homes in India

Industry insiders said post-pandemic, there has been a major shift in NRI preferences in home purchases, with a sizeable percentage of them now opting for luxury and super luxury properties.

A recent consumer survey by Anarock showed that in terms of preferences, a sizeable chunk of NRI buyers – over 21 percent – prefer to buy luxury homes priced up to ₹25 million ($300,376), while the top 10 percent going for super luxury homes priced much above this level.

The maximum number of NRIs – about 70 percent – however prefer properties priced above ₹9 million ($108,136), with 47 percent investing in homes priced up to ₹15 million ($180,226).

Significantly, the rising expat Indian preference for luxury housing properties back home comes despite a significant spike in residential properties in recent months and years.

The average housing property prices in the top 7 Indian cities combined are estimated to have increased by 22 percent in the year to reach nearly ₹6,800 ($82) per sqft. by Q3 2023 end.

Mumbai, Delhi-NCR, Bengaluru top draws for NRI investments

Owen said among the Indian cities, Mumbai, Delhi-NCR, Hyderabad, Bangalore, and Pune continue to be popular investment destinations by the NRIs.

“Rapid infrastructure additions and job opportunities are seen as the main factors for the high demand for residential and commercial properties in these cities,” he said.

These cities also offer substantial capital appreciation and rental income potential, he said.

The Dubai-based Anarock top executive said, of late Tier 2 and 3 Indian cities are also gaining prominence as emerging investment hotspots.

“Cities such as Ahmedabad, Chandigarh, Jaipur, Kochi, and Lucknow are witnessing rapid urbanisation, infrastructural development, and a rising middle-class population. These factors contribute to increased demand for residential properties, making them attractive investment options [for NRIs], Owen said.

On special offers, Own said post-Covid the offers by developers were mainly for stamp duty or GST waivers.

“In 2022, we saw mostly freebies on offer by the developers including gold coin, phones, modular kitchens etc, though many of the projects that witnessed good sales hardly saw any offers,” he said.

Owen said similar trends are expected this year also as housing demand is robust, and when demand is high there are less festive offers on display.